RBS, Commerzbank Drawn Into U.S. Iran Money Probe

U.S. authorities are investigating Royal Bank of Scotland and Commerzbank over possible breaches of sanctions on Iran, in a widening crackdown which has already cost Standard Chartered a hefty fine.

U.S. authorities are
investigating Royal Bank of Scotland and Commerzbank
over possible breaches of sanctions on Iran, in a
widening crackdown which has already cost Standard Chartered
a hefty fine.

An RBS spokeswoman declined detailed comment on Wednesday
but referred to disclosures published with the bank's half-year
results earlier this month. These said RBS had initiated talks
with U.S. and British authorities on whether it complied with
economic sanctions on Iran, and that it could face a "material
impact" from the investigation.

The inquiry raises the possibility of a substantial
punishment for the part-nationalized British bank, which is also
being investigated for its involvement in the Libor rate rigging
scandal, ramping up pressure on Chief Executive Stephen Hester.

The United States first imposed sanctions on Iran more than
30 years ago but has tightened them in recent years as it tries
to stifle Tehran's nuclear program.

In the disclosures accompanying the RBS results on Aug. 3,
the British bank said it had "initiated discussions with UK and
U.S. authorities to discuss its historical compliance with
applicable laws and regulations, including U.S. economic
sanctions regulations".

These followed an internal review begun by Hester shortly
after his arrival at the bank in 2008.

"The investigation costs, remediation required or liability
incurred could have a material adverse effect on the group's net
assets, operating results or cash flows in a particular period,"
the bank said. RBS had been making similar disclosures for the
past 18 months, the spokeswoman said.

The scale of the transactions being investigated at RBS,
which is 82 percent-owned by the taxpayer, was not clear.

The Financial Times reported on Wednesday that the U.S.
Federal Reserve and Department of Justice were conducting the
investigation, citing several people close to the situation. It
cited a person familiar with the situation as saying one risk
manager had already left the bank following the internal review.

A spokesman for the Federal Reserve said it could not
"comment on supervisory matters pertaining to individual
institutions". A representative at the Justice Department did
not respond to a request for comment.